Under the lower-of-cost-or-market basis in valuing inventory, net realizable value is defined as
A) current replacement cost.
B) selling price.
C) historical cost plus 10%.
D) selling price less markup.

Question

Quizplus · Accepted Answer

According to the lower-of-cost-or-market basis, inventory should be valued at the lower of its cost or its net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less estimated costs of completion, disposal, and transportation. Current replacement cost is the most appropriate measure of net realizable value in most cases.

Under the Lower-Of-Cost-Or-Market Basis in Valuing Inventory, Net Realizable Value